Calgary, March 13, 2020: Valeura Energy Inc. (TSX:VLE, LSE:VLU) (“Valeura” or the “Company”), the upstream natural gas company focused on the Thrace Basin of Turkey, reports its financial and operating results for the three month period ended December 31, 2019 and the year ended December 31, 2019, and year-end 2019 reserves.

The complete quarterly reporting package for the Company, including the audited financial statements and associated management’s discussion and analysis (“MD&A”) and the 2019 annual information form (“AIF”), are being filed on SEDAR at and posted on the Company’s website at At year end 2019, Valeura changed its reporting currency to US dollars and, unless noted, all references to currency are now US dollars.

Financial and Operating Results Highlights

  • Q4 2019 average production of 646 boe/d, up 22% from Q3 2019;
  • Q4 2019 average realised gas prices of $7.44/Mcf and operating netback of $24.53/boe, relatively unchanged from the prior quarter;
  • Net working capital surplus at year-end of $37.6 million, including cash of $36.1 million;
  • Total Proved Plus Probable Reserves of 7,936 Mboe at year end, up 8% from the prior year;
  • Total Proved Plus Probable Reserves before tax net present value of $91.9 million, up 43% from the prior year;
  • Proved Reserves replacement ratio of 250% in 2019;
  • Two deep unconventional appraisal wells drilled safely in 2019 with five production tests on stimulated zones all yielding stabilised gas flow; and
  • Subsequent to year end 2019, Equinor Turkey B.V. (“Equinor”) provided notification in February 2020 of their intent to withdraw from the appraisal of the deep unconventional play in the Thrace Basin.


Valeura’s ongoing revenue generation remains unimpeded by current volatility in global oil prices.  The Company’s gas is sold at fixed prices which are not oil-price linked, and remain unchanged from Q4 2019.  In addition, the Company remains in a strong financial position, with a working capital surplus of $37.6 million at year end and no debt, which affords the Company significant flexibility as it looks toward the forward plan.


Sean Guest, President and CEO commented:

“We have continued to realise strong gas prices and generate strong netbacks from our shallow conventional gas business. Our 2019 work programme of selective workovers and well interventions has yielded both an up tick in production and a marked increase in both reserves volumes and value, as assessed by our third party reserves evaluator at year-end.

“Our team remains committed to the ongoing appraisal of our deep tight gas play. The substantial data gathered through our 2019 appraisal programme has furthered our understanding of key subsurface characteristics of this gas accumulation, and these learnings will help inform our next steps to appraise this material resource, which we will communicate to the market as soon as possible. 

“Valeura remains in a strong financial position, and we intend to keep it that way. We are a cash flow generating business, with a balance sheet that is debt-free and has working capital resources of over $37 million. Raising our sights to 2020 and beyond, our Company is well-positioned to unlock value for shareholders, both through the deep tight gas play, and through our conventional gas production, where we continue to enjoy gas prices that remain unchanged and not directly linked to volatility in global oil price benchmarks.”


Table 1 Financial and Operating Results Summary

Three Months Ended December 31, 2019 Three Months Ended September 30, 2019 Year ended December 31, 2019 Three Months Ended December 31, 2018 Year ended December 31, 2018
(thousands of US$ except share amounts)
Petroleum and natural gas revenues 2,653 2,166 10,177 2,384 9,249
Adjusted funds flow (1) 1,595 1,032 3,741 2,330 2,789
Net loss from operations (735) (166) (4,815) (481) (5,519)
Exploration and development capital 3,669 809 11,801 2,739 6,144
Banarli Farm-in proceeds (2) (1,452)
Net working capital surplus 37,645 39,869 37,645 43,884 43,884
Cash 36,111 38,487 36,111 45,993 45,993
Common shares outstanding












Share trading (CDN$ per share)












 Crude oil (barrels (“bbl”)/d) 18 9 8 8
Natural Gas (one thousand cubic feet (“Mcf”)/d) 3,877 3,078 3,907 3,689 4,257
 boe/d 646 531 660 623 717
Average reference price

Brent ($ per bbl)
BOTAS Reference ($ per Mcf) (3)











Average realised price

Crude oil ($ per bbl)
Natural gas ($ per Mcf)











Average Operating Netback
($ per boe) (1)
24.53 25.02 24.00 24.57 19.93
See the Company’s 2019 Management’s Discussion and Analysis for the three months and years ended December 31, 2019 and 2018 filed on SEDAR for further discussion.
(1) The above table includes non-IFRS measures, which may not be comparable to other companies. Adjusted funds flow is calculated as net income (loss) for the period adjusted for non-cash items in the statement of cash flows.  Operating netback is calculated as petroleum and natural gas sales less royalties, production expenses and transportation.
(2) Proceeds received from Equinor to complete spending commitment for Phase 2 of the Banarli Farm-in. Recorded in the financial statements as a reduction of exploration and evaluation assets.
(3) BOTAS regularly posts prices and its Level-2 Wholesale Tariff benchmark is shown herein as a reference price. See the Company’s AIF filed on SEDAR for further discussion.


Net petroleum and natural gas sales in Q4 2019 averaged 646 boe/d, which was 22% higher than Q3 2019. This continued increase in production primarily reflects the impact of successful well workovers in late 2019. Workover operations have continued into 2020 further increasing production above Q4 2019 resulting in average Q1 2020 production expected to exceed 700 boe/d.

Production revenue in Q4 2019 was $2.7 million, an increase of 22% over Q3 2019 due to the higher production in Q4, coupled with gas prices and operating netbacks remaining stable.

Exploration and development capital spending was $3.7 million in Q4 2019, increased from $0.8 million in the prior quarter, reflecting spending related to the Company paying its 31.5% working interest share of the completion and production testing of the Devepinar-1 well.

As of December 31, 2019, the Company had a net working capital surplus of $37.6 million, of which $36.1 million was cash.



Production Operations

Valeura generates cash flow from the direct sale of petroleum and natural gas from its operated production assets to approximately 55 light industry customers. Gas prices remain high in Turkey and the Company’s production generates strong operating netbacks, most recently in excess of $24/boe. This generates operating income for the business and also underscores the long-term potential value of the Company’s unconventional gas resource.

In Q1 2020, the Company is continuing with selective low-cost production well workovers throughout its conventional operations. This has recently yielded an increase in production, which is more than offsetting natural declines from the existing fields. This programme has been both technically and financially successful as individual well projects have generally delivered payback on the order of a few weeks or a few months. These workover operations are expected to continue throughout much of 2020 incorporating results from the current programme to guide future activities.

In addition, the Company commenced a study in mid-2019 to assess the potential for further exploitation of its conventional play by converting reserves into production. The Company plans to drill two shallow exploration wells on the West Thrace exploration licence during Q2 2020 which will target the Osmancik and Mezardere Formations and will fulfil the remaining work obligations in the current term of this licence.  The anticipated aggregate capital spending for these wells is approximately $1.5 million.

Deep Unconventional Gas Play

In 2019, the Company successfully drilled two deep appraisal wells, including Inanli-1 drilled to 4,885 metres and Devepinar-1 drilled to 4,765 metres. Both drilling operations were conducted as planned, safely, and under budget, with much of the cost for the operation carried by the Company’s joint venture partner, Equinor. The wells, which are 20 km apart, both encountered the objective reservoir section as prognosed, encountering highly over-pressured, gas-bearing sands.

On Inanli-1, approximately 1,600 metres of potential gas reservoir was identified, and four intervals were stimulated and tested over a depth range of approximately 3,680 and 4,284 metres. All four intervals produced gas at stabilised rates, and the results provided valuable insight into the variability of product composition across the vertical expanse of the play, with relatively dryer gas encountered deeper in the reservoir. On Devepinar-1, the deepest zone of interest was stimulated from 4,640 metres to 4,765 metres and flowed for several weeks. Interpretation of the Devepinar-1 test data suggests vertical connectivity across the more than 100 metres accessed, a key observation that will factor into future well planning for potential horizontal wells.

Both 2019 deep wells have been suspended and left in a state to enable re-entry in the future to conduct additional work. Notably, longer term flow testing of these wells is required to fully demonstrate sustainability of flow and commerciality from the best zones.

In February 2020, Equinor provided notice to the Company of their intent to withdraw from all production leases and exploration licences where they hold rights in the deep unconventional gas play. Valeura, Equinor and Pinnacle Turkey Inc. are finalising commercial agreements to effect the withdrawal of Equinor from the production leases and exploration licences. Valeura is seeking routine government approval for the transfer of Equinor’s 50% interest to the remaining joint venture partners, and in Q2 2020, will be filing the first two-year extension application for each of the three exploration licences, including two at Banarli and one at West Thrace, which if approved will extend the licences until June 26, 2022.

Valeura remains committed to the ongoing appraisal of the deep unconventional gas play. The Company’s immediate priority is to complete the commercial arrangements whereby Equinor’s 50% working interest will be returned to the remaining joint venture partners. Valeura will communicate an update on its rights and on plans for the deep play in the coming weeks.



The Company has completed its independent reserves evaluation as at December 31, 2019. This evaluation was conducted by DeGolyer and MacNaughton (“D&M”) in its report dated February 25, 2020 (“D&M Reserves Report”).

Table 2 summarises the Company’s reserves in Turkey and the before tax net present value discounted at 10% (“NPV10”). D&M evaluated reserves as at December 31, 2019 on the Company’s Banarli licences (100% working interest shallow/50% deep) and TBNG JV production leases and exploration licences (81.5% working interest shallow / 31.5% deep in West Thrace and 81.5% in all horizons in South Thrace).

Table 2 Company Gross Reserves Volumes and Values (1)(2)




Before Tax NPV10



2018 %


2019 2018



  Developed producing


502 5% 9.5 7.0


  Developed non-producing


204 134% 10.2 3.0




1,256 4% 12.7 9.3


Total Proved (1P)


1,962 17% 32.4 19.3




5,388 5% 59.5 44.8


Total Proved Plus Probable (2P)


7,350 8% 91.9 64.1




4,213 5% 55.1 44.7


Total Proved Plus Probable Plus Possible (3P)


11,563 7% 147.0 108.8


(1) See Oil and Gas Advisories and Reserves Definitions below.
(2) Due to rounding, summations in the table may not add.


The forecast prices used in the D&M Reserves Report to calculate value are $7.53/Mcf for natural gas and $65.77/bbl for light and medium crude in 2020, and these prices both escalate at 2% per year going forward. This natural gas price forecast is for the TBNG assets, and the realised price for the Banarli assets is approximately 97% of this price. More details on prices are included in the AIF filed on Sedar.

The reserves are almost wholly natural gas, but small oil volumes are assigned to a number of wells. The 2019 year-end reserves by principal product type are summarised in Table 3.


Table 3 2019 Year-end Company Gross Reserves Volumes by Principal Product Type (1)

















Total Proved Plus Probable








Total Proved Plus Probable Plus Possible




(1) See Oil and Gas Advisories and Reserve Definitions below.


Table 4 sets forth a reconciliation of reserves changes in 2019.

Table 4 2019 Year-end Company Gross Reserves Reconciliation






At December 31, 2018



  Technical Revisions







  Economic Factors




At December 31, 2019





Valeura will hold its annual and special meeting of shareholders on May 13, 2020. The meeting materials will be mailed in the first part of April 2020.



Valeura Energy Inc. is a Canada-based public company currently engaged in the exploration, development and production of petroleum and natural gas in Turkey.



D&M Reserves Report
The D&M Reserves Report was prepared using guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and in accordance with National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). Additional reserves information as required under NI 51-101 is included in the AIF filed on SEDAR.

A BOE is determined by converting a volume of natural gas to barrels using the ratio of 6 Mcf to one barrel. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Further, a conversion ratio of 6 Mcf:1 BOE assumes that the gas is very dry without significant natural gas liquids. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilising a conversion on a 6:1 basis may be misleading as an indication of value.



With respect to the reserves data contained herein, the following terms have the meanings indicated:

“Company Gross reserves” are the Company’s working interest (operating or non-operating) share before deducting royalties and without including any royalty interests of the Company.

“developed” reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.

“developed producing” reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

“developed non-producing” reserves are those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of resumption of production is unknown.

“possible” reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable plus possible reserves.

“probable” reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

“proved” reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

“reserves” are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, from a given date forward, based on: (a) analysis of drilling, geological, geophysical, and engineering data; (b) the use of established technology; and (c) specified economic conditions, which are generally accepted as being reasonable and shall be disclosed. Reserves are classified according to the degree of certainty associated with the estimates.

“undeveloped” reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.



This news release contains certain forward-looking statements and information (collectively referred to herein as “forward-looking information”) including, but not limited to: the Company’s anticipated timing to communicate an update on its rights and plans for the deep play; expected production in Q1 2020; the use of data to inform future appraisal of the deep tight gas play; the continuation of high gas prices in Turkey to underscore the long-term potential value of the deep tight gas play; the continuation of workover operations throughout 2020; the Company’s plans to drill two shallow exploration wells on the West Thrace exploration licence and such wells fulfilling the remaining licence obligations, and the associated capital spending for these wells; the use of the interpretation of the Devepinar-1 test data for future well planning for potential horizontal wells; and the timing to file documents seeking government approval relating to the transfer of Equinor’s interest and exploration licence extensions. Forward- looking information typically contains statements with words such as “anticipate”, estimate”, “expect”, “target”, “potential”, “could”, “should”, “would” or similar words suggesting future outcomes. The Company cautions readers and prospective investors in the Company’s securities to not place undue reliance on forward-looking information, as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company.

Statements related to “reserves” are deemed forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves can be profitably produced in the future. Specifically, forward-looking information contained herein regarding “reserves” may include: estimated volumes and value of Valeura’s oil and gas reserves and the ability to finance future development.

Forward-looking information is based on management’s current expectations and assumptions regarding, among other things: political stability of the areas in which the Company is operating and completing transactions; continued safety of operations and ability to proceed in a timely manner; the impact of Equinor’s withdrawal from joint operations; continued operations of and approvals forthcoming from the Turkish government in a manner consistent with past conduct; the identification of one or more wells that exhibit the potential for sustained  gas flow; future seismic and drilling activity on the expected timelines; the continued favourable pricing and operating netbacks in Turkey; future production rates and associated operating netbacks and cash flow; decline rates; future sources of funding; future economic conditions; future currency exchange rates; the ability to meet drilling deadlines and other requirements under exploration licences and production leases; and the Company’s continued ability to obtain and retain qualified staff and equipment in a timely and cost efficient manner. In addition, the Company’s work programmes and budgets are in part based upon expected agreement among joint venture partners and associated exploration, development and marketing plans and anticipated costs and sales prices, which are subject to change based on, among other things, the actual results of drilling and related activity, availability of drilling, high-pressure stimulation and other specialised oilfield equipment and service providers, changes in partners’ plans and unexpected delays and changes in market conditions. Although the Company believes the expectations and assumptions reflected in such forward-looking information are reasonable, they may prove to be incorrect.

Forward-looking information involves significant known and unknown risks and uncertainties. Exploration, appraisal, and development of oil and natural gas reserves are speculative activities and involve a degree of risk. A number of factors could cause actual results to differ materially from those anticipated by the Company including, but not limited to: the risks of currency fluctuations; changes in gas prices and netbacks in Turkey; potential changes in joint venture partner strategies and participation in work programmes; uncertainty regarding the contemplated timelines and costs for the deep evaluation; the risks of disruption to operations and access to worksites, threats to security and safety of personnel and potential property damage related to political issues or civil unrest in Turkey; potential changes in laws and regulations, the uncertainty regarding government and other approvals, including the transfer of Equinor’s working interests in production leases and exploration licences to Valeura and PTI and exploration licence extension applications at Banarli and West Thrace; counterparty risk; risks associated with weather delays and natural disasters; and the risk associated with international activity. The forward-looking information included in this news release is expressly qualified in its entirety by this cautionary statement. The forward-looking information included herein is made as of the date hereof and Valeura assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law. See the 2019 AIF for a detailed discussion of the risk factors.

Additional information relating to Valeura is also available on SEDAR at


This announcement does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction, including where such offer would be unlawful. This announcement is not for distribution or release, directly or indirectly, in or into the United States, Ireland, the Republic of South Africa or Japan or any other jurisdiction in which its publication or distribution would be unlawful.

Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this news release.


For further information, please contact:

Valeura Energy Inc. (General and Investor Enquiries)                       +1 403 237 7102
Sean Guest, President and CEO
Heather Campbell, CFO
Robin Martin, Investor Relations Manager,

Canaccord Genuity Limited (Corporate Broker)                                +44 (0) 20 7523 8000
Henry Fitzgerald-O’Connor, James Asensio

CAMARCO (Public Relations, Media Adviser)                                   +44 (0) 20 3757 4980
Owen Roberts, Monique Perks, Hugo Liddy, Billy Clegg